By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- Europe's top stock index finished a
choppy session with a small daily and weekly loss Friday as
investors grew cautious ahead of next week's Federal Reserve
meeting.
On the upside LVMH Moët Hennessy Louis Vuitton SA, Belgacom SA
and Pearson PLC all gained on corporate results.
The Stoxx Europe 600 index finished below the key 300 level at
298.91, a 0.2% drop for the day that left it with a weekly decline
of 0.3%. The index closed 0.5% lower a day earlier as investors
fretted about economic growth in China and a downbeat set of
earnings from some big companies. See video: Europe's Week
Ahead
The global backdrop provided little support, with U.S. markets
failing to sustain a bounce after an upbeat reading on consumer
sentiment. Stocks in Japan sank 3% as exporters fell on a strong
yen.
"European markets are trading cautiously because traders are not
willing to place better bets ahead of the FOMC [Federal Open Market
Committee] meeting" next week, said Naeem Aslam, chief market
analyst at Ava Trade, in emailed comments.
"This is despite the fact that Bernanke may deliver another well
statement on Wednesday and may keep the current pace of the asset
purchase," said Aslam. "However, the market is also very much used
to an idea of surviving without the stimulus help, but it is the
earnings results which has dampened the mood in Europe."
There was a little bit of earnings cheer on Friday. Pearson PLC
shares jumped 6.2%. The publisher said it swung to a first-half
loss as it continues to restructure its business. The company said
in trading terms, 2013 has begun as expected.
The FTSE 100 index fell 0.5% to 6,554.79. Shares of
GlaxoSmithKline PLC (GSK) fell 1.2%. Shares of British Sky
Broadcasting Group PLC fell more than 3%, even as it reported a
rise in full-year profit, but analysts noted shares have had a
strong recent run.
On the upside, shares of Belgacom SA jumped more than 9% after
the telecommunications group's results beat analysts' expectations
and the company also said it was on track to meet full-year
guidance.
Friday also marks the one-year anniversary of a promise by
European Central Bank President Mario Draghi to do "whatever it
takes" to preserve the euro. In an interview with Handelsblatt
newspaper, former ECB chief economist Jurgen Stark warned that the
crisis will likely come to a head in late autumn and France could
be the next to require use of the ECB's bond-buying Outright
Monetary Transactions program. Read: Here's how things look a year
after Mario Draghi pledged "whatever it takes" to save the
euro.
Analysts at Credit Suisse upgraded the banking sector to
overweight from benchmark, citing "clear signs" of macro
improvement in the euro area and attractive valuations. European
banks, the analysts noted, are trading at a near-record 42%
price/tangible book versus U.S. banks. That ratio refers to the
price of a security versus its value, excluding intangible
assets.
Top picks for Credit Suisse include HSBC PLC (HBC), BNP Paribas
SA , Société Générale SA , Julius Baer Gruppe AG and Deutsche Bank
AG .
Shares of HSBC fell 0.4% in London, but in Paris, BNP Paribas
rose 0.8% and Société Générale traded flat. The French CAC 40 index
shook off the weaker trend across Europe to gain 0.3%, ending at
3,968.84.
The index was buoyed as LVMH Moët Hennessy Louis Vuitton rose
3.6%. The luxury goods group reported a day earlier that organic
growth in the second quarter rose 0.9%, accelerating from the first
period.
Also in that sector, shares of Kering SA rose nearly 4%. The
owner of the Gucci label said sales growth for its luxury unit rose
6% in the second quarter, from 4.5% in the prior quarter.
The German DAX 30 index , meanwhile, fell 0.7% to 8,244.91.
Autos led decliners, with Daimler AG down 2.3%. Concerns about
Chinese growth have been weighing on growth stocks this week.
Also down, shares of heavyweight Seadrill Ltd. fell 1.6% after
HSBC cut it to neutral from overweight.
Some peripheral indexes were fared better than the core markets.
Madrid's IBEX 35 index gained 0.9% to 8,353.60, as Banco Santander
SA (SAN) rose 0.9%.
The Greek ASE Composite index rose 2.6% to 865.72, with shares
of Hellenic Telecommunications Organization SA rising 2.8%.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires